We'll all pay a price for the public sector pay crunch
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Version 0 of 1. Conservative chancellor? Problem with a budget deficit you keep promising to fix? Don’t want to tax your comfortably off, middle class Daily Mail reading supporters? The solution is obvious: squeeze the public sector. Freeze their pay, and let them whistle. They read lefty newspapers, or worse still, get their news from the BBC, and they’re never going to vote for you. Thanks to your repressive anti union laws, you don’t have to worry too much about problems from that source either. The now longstanding policy of choking public sector wages wasn’t as awful as it might have been in the years when inflation was all but absent. But because of the Government’s lunatic attachment to a hard Brexit, rising prices are back courtesy of the struggles of the punch bag pound. The resurgence in inflation is hitting the value of people’s pay packets across the board. Unless, of course, you happen to be a CEO when it rises regardless of economic conditions or whether you’re any good. Or unless you're an MP or minister (ditto). And if you fail at the latter you can follow George Osborne's example and hit the City jackpot! However, in the public sector, which employs one in six British workers, the outlook is particularly bleak. Just how bleak has been thrown into stark relief by the Resolution Foundation. With the growth in pay bills capped at 1 per cent for the next three years, it says real pay, adjusted for inflation, will continue to fall for the rest of this decade. The Foundation forecasts that the average will be back below 2004-05 levels by the end of the current parliament (2019-20). Now it should be said that there will be some protection for those at the bottom from the (welcome) planned rises to the minimum wage. But hard times are on the way for an awful lot of people nonetheless. That creates a problem. While the Government relies upon the fact that if you’re going to go into teaching, or nursing, or many other essential services, your primary motivation isn’t money, it still matters. It is true that public sector pensions are good (although not as good as they once were) but that’s balanced out by the forest of paperwork created by Whitehall, ministers continually implying you’re no good at your job and they could do better if given an afternoon’s training, their allies in the press doing the same. It’s not just teachers, nurses, doctors, people who can usually count on at least some measure of public sympathy, we should be thinking about here either. They might not be at the top of the of the public’s list of most esteemed occupations, but council planning officials are public servants too, and they perform a very necessary function. Just how important their jobs are can be seen in the log jams that are being created when it comes to getting desperately needed new housing developments built. It is fashionable to criticise local authorities for these. They’re all sclerotic bureaucracies allergic to getting things done, aren’t they? Except that if you speak to the big house builders, as I have, a different picture emerges. While they won’t stint on criticising councils where they feel that is needed, they also recognise that planning offices have been so starved of funds they are struggling to cope with the volume of applications they are receiving. More, and better paid, planning officials might help to fix that, easing some of the current pressure in the market. It’s only when I venture to suggest that the builders might themselves make a contribution to getting that done that they go all quiet. Here's Adam Corlett, economic analyst at the Resolution Foundation, on the problem of squeezing public servants: “Although public sector pay restraint is important to the government’s deficit reduction plans, falling real pay is likely to see increasing recruitment strains.” Quite. It hardly needs pointing out that those strains are going to be exacerbated by the Government’s intention to crackdown on immigration. Problems can be seen in public services wherever you look. Squeezing the pay of committed public servants will only make them worse. Mr Osborne, who set that policy in train, won’t notice. When you make as much as he does from a second job in the City you have enough money to buy out of the system. The same, it should be said, is true of his millionaire successor Philip Hammond and most of his government colleagues. |